Governor Kathy Hochul announced that Chicago Atlantic Admin, LLC ("Chicago Atlantic") is investing up to $150 million senior secured capital in the New York State Cannabis Social Equity Investment Fund (the "Fund"). The legislation that allowed for the Fund's creation provided for a $200 million cap of combined investments into it. With Chicago Atlantic's investment, the Fund will receive support to reach its funding goal of up to $200 million, which Governor Hochul and the Legislature sought when it adopted legislation to create this first-of-its-kind support for individuals affected by the unequal enforcement of cannabis prohibition.
"New York has always strived to lead the nation in providing opportunities for those who have been unjustly denied privileges and opportunities," Governor Hochul said. "Today's announcement reinforces New York's commitment to building partnerships that benefit New Yorkers and setting right the wrongs of the past. I welcome Chicago Atlantic's participation in this program and applaud their recognition of the value that New York's cannabis program will provide to so many."
Together with the state's $50 million investment, which will be funded from state cannabis industry revenues, Chicago Atlantic's contribution will enable justice-impacted individuals who have received Conditional Adult Use Cannabis Dispensary (CAURD) licenses from the New York State Office of Cannabis Management and Cannabis Control Board to receive turnkey dispensaries to start their businesses. The funds will be used to secure, lease, design, construct and furnish the CAURD dispensaries, which will be subleased to eligible CAURD licensees. The licenses will be issued low-interest loans to repay set-up costs associated with the Fund program.
Chicago Atlantic, which has over 50 employees and has deployed over $1.8 billion across more than 50 investments, manages a diversified portfolio of credit investments with extensive experience in the cannabis industry. Led by a management team with expertise in real estate credit, direct lending, and risk management, Chicago Atlantic has created a leading cannabis lending platform. Chicago Atlantic's flagship investment vehicle, Chicago Atlantic Real Estate Finance, Inc. (NASDAQ: REFI), is a mortgage real estate investment trust utilizing significant real estate, credit, and cannabis expertise to originate senior secured loans primarily to state-licensed cannabis operators in limited-license jurisdictions in the United States.
Chicago Atlantic Founding Partner John Mazarakis and Managing Director Peter Sack said, "We are proud to support the Governor's initiative as well as New York's CAURD licensees, the Cannabis Social Equity Investment Fund, the Dormitory Authority, the Cannabis Control Board and the Office of Cannabis Management in this transformational initiative. Social equity is the cornerstone of New York's cannabis industry, and here we aim to pair progressive licensing with progressive and innovative capital solutions. The success of New York's social equity initiatives and its CAURD licensees will benefit all industry participants and further support the development of the legal cannabis industry nationwide."
The Social Equity Servicing Corporation (SESC), a subsidiary of the Dormitory Authority of the State of New York (DASNY), is executing the work to develop dispensaries as an agent for the Cannabis Social Equity Investment Fund.
DASNY President and CEO Reuben McDaniel said, "Today is a historic milestone in the history of justice and social equity in New York State. I am proud to partner with Chicago Atlantic, an experienced company that will help fulfill the Governor's and Legislature's vision of providing opportunity and hope for individuals hurt by the draconian drug laws of the past. Chicago Atlantic's financial commitment and the partnership we have created will help open doors for so many who have faced unsurmountable obstacles of accessing capital and economic security."
New York State Office of Cannabis Management Executive Director Chris Alexander said, "Thank you to Chicago Atlantic for investing in New York's first adult-use retail licensees. This infusion of capital will provide the necessary support to licensees and will help New York further its work of establishing an inclusive cannabis market that creates opportunities for entrepreneurs harmed by prohibition and locked out of markets in other states."
Cannabis Control Board Chair Tremaine Wright said, "Governor Hochul's announcement of the $150 million senior secured capital investment is a transformative moment for the New York State Cannabis Social Equity Investment Fund. This partnership will fortify the fund, ensuring that we can meet the needs of our licensees and empower them to thrive in New York States' ever-evolving cannabis industry."
Assembly Majority Leader Crystal Peoples-Stokes said, "I'm thrilled to see our collective vision coming to fruition for the New York Social Equity Cannabis Fund. Thank you, Chicago Atlantic. These funds will be impactful to help support CAURD licensees get up and running."
New York State Senator Jeremy Cooney said, "Thank you to Chicago Atlantic for their investment in the promise we made when first legalizing adult-use cannabis — New York must be the most equitable and empowering cannabis marketplace in the nation."
Social Equity Impact Ventures Principal William Thompson said, "Chicago Atlantic's experience at the cross-section of cannabis, real estate, and credit was key to a successful collaboration with New York's first-of-its-kind cannabis Public-Private-Partnership (PPP) and supported the fund's similarly diversified purpose. Working in partnership with DASNY, led by its visionary President & CEO Reuben McDaniel, the fund has been conducting evaluations of thousands of potential store locations across New York State. The effort has led to dozens of executed leases while at the same time effectuating the design-build process, training, and operations for store operators. To launch any business in just one year is significant. To launch an entirely new, highly regulated industry in that same short period is quite a feat and would never have happened without Governor Kathy Hochul's commitment to social justice."
Cannabis Social Equity Investment Fund Principal Chris Webber said, "We are honored by Chicago Atlantic's recognition of the Fund's role in fostering social equity within the NYS cannabis industry. With our dedicated partners, we are committed to breaking down barriers and creating a more inclusive landscape. This transformative collaboration marks a significant milestone in our collective journey towards a future where every individual has equal access to opportunity and funding, therefore, empowering communities and driving positive change. Thank you to Governor Hochul for honoring us with the challenge to do things differently in New York for a groundbreaking result."
The Cannabis Social Equity Investment Fund, which was authorized as part of the FY 2023 Enacted Budget, is a public-private limited partnership formed to position social equity entrepreneurs to succeed in New York's newly created adult-use cannabis industry. It will allow the state to invest in a private fund to finance the leasing and equipping of conditional adult-use retail dispensaries in New York State to be operated by individuals who have been impacted by the inequitable enforcement of cannabis laws. It is the first of its kind in the nation.
The Fund will help those who have a CAURD license meet the costs of establishing adult-use cannabis retail dispensaries, including the identification and leasing of suitable retail locations and design, construction, and fit-out of the spaces. It is supported by up to $50 million in licensing fees and revenue from the adult-use cannabis industry and up to $150 million from the private sector.
Last year, Governor Hochul proposed, and the Legislature enacted, the Public-Private-Partnership to provide support to individuals who were disproportionally impacted by the Rockefeller Drug Laws and who met OCM licensing requirements. The Governor leveraged DASNY's finance, procurement, design, and construction expertise to help manage the process. In the months following enactment of the Fund, DASNY created the SESC as a DASNY subsidiary to execute work on behalf and as an agent to the Fund; engaged in a competitive procurement process to secure a Fund Manager, Point of Sale system, and design-build firms; identified and evaluated 10,000 commercial retail properties statewide for dispensaries; and engaged with property owners statewide and executed leases for locations that will be subleased to CAURD licensees.
Source: governor.ny.gov